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EXHIBIT 10.1
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of _____________, 1999 (the
"Agreement"), by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Living Omnimedia LLC, a Delaware
limited liability company (the "Company"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Living Omnimedia,
Inc., a Delaware corporation and wholly owned subsidiary of the Company (the
"Corporation"), The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Family Limited Partnership, a Connecticut
limited partnership ("▇▇▇▇▇▇▇"), Time Publishing Ventures, Inc., a Delaware
corporation ("Time"), KPCB Holdings, Inc., a California limited partnership, as
nominee ("KPCB"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
P.C. (together with ▇▇▇▇▇▇▇, Time and KPCB, the "Stockholders").
RECITALS:
WHEREAS, the Company and the Stockholders are parties to that certain
Fourth Amended and Restated Limited Liability Company Agreement of the Company,
dated as of July 27, 1999 (the "LLC Agreement");
WHEREAS, the Board of Directors of the Company has approved the terms
of a merger (the "Merger") pursuant to which the Company shall be merged with
and into the Corporation for purposes of effecting an initial public offering
(the "Initial Public Offering") of the surviving corporation in the Merger;
WHEREAS, the parties hereto desire to enter into certain arrangements
relating to the Corporation to be effective immediately upon effectiveness of
the Merger.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1. Definitions. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified.
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Affiliate" means with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by, or is under common control
with, the specified Person, and that Person's spouse, estate, personal
representative or lineal descendants or any trust for the benefit of such Person
and/or such Person's spouse and/or such Person's lineal descendants or any
entities controlled by such Person. As used in this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
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"Agreement" means this Stockholders Agreement, as amended, modified,
supplemented or restated from time to time.
"Assign" and "Assignment" have the meanings set forth in Section 2.1
hereof.
"Board" shall mean the Board of Directors of the Corporation.
"Class A Stock" shall mean Class A Common Stock, par value $.01 per
share, of the Corporation.
"Class B Stock" shall mean Class B Common Stock, par value $.01 per
share, of the Corporation.
"Company" shall have the meaning set forth in the preamble hereto.
"Corporation" shall have the meaning set forth in the preamble hereto.
"Delaware Act" shall the Delaware General Corporation Law.
"Directors" means those individuals elected as members of the Board.
"Effective Date" shall have the meaning set forth in Section 5.1
hereof.
"Initial Public Offering" shall have the meaning set forth in the
recitals hereto.
"KPCB" shall have the meaning set forth in the preamble hereto.
"KPCB Demand" shall have the meaning set forth in Section 3.1(b)
hereof.
"LLC Agreement" shall have the meaning set forth in the recitals
hereto.
"LLC Interest Purchase Agreement" shall mean that LLC Membership
Interest Purchase Agreement, dated as of July 27, 1999, by and among the
Company, KPCB and KPCB IX Associates, LLC, a California limited liability
company.
"Merger" shall have the meaning set forth in the recitals hereto.
"▇▇▇▇▇▇▇" shall have the meaning set forth in the preamble hereto.
"▇▇▇▇▇▇▇ Demand" shall have the meaning set forth in Section 3.1(d)
hereof.
"Person" includes any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company,
or other legal entity or organization.
"▇▇▇▇▇▇▇" shall have the meaning set forth in the preamble hereto.
"▇▇▇▇▇▇▇ Demand" shall have the meaning set forth in Section 3.1(c)
hereof.
"Stock" shall mean the Class A Stock and Class B Stock.
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"Stockholder" shall have the meaning set forth in the preamble hereto,
and includes any Person who acquires Stock pursuant to the provisions of this
Agreement.
"Time" shall have the meaning set forth in the preamble hereto.
"Time Demand" shall have the meaning set forth in Section 3.1(a)
hereof.
"Warrant" shall mean the Warrant for a Percentage of the Internet
Business of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Living Omnimedia LLC, issued on July 27, 1999 to
KPCB.
Section 1.2. Headings. The headings and subheadings in this Agreement
are included for convenience and identification only and are in no way intended
to describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
ARTICLE II
STOCKHOLDER COVENANTS
Section 2.1. Transfers and Assignments of Interests Generally. Prior to
the Initial Public Offering, the Stockholders may not sell, assign, transfer,
pledge, hypothecate, mortgage or dispose of, by gift or otherwise, or in any way
encumber ("Assign," and such act, an "Assignment") all or any part of the shares
of Class A Stock or Class B Stock owned by such Stockholder, except in
compliance with the terms of the LLC Agreement (treating such shares of Stock as
though they were LLC Interests). Following consummation of the Initial Public
Offering, such shares of Stock may be transferred in accordance with applicable
law and further subject, in the case of Time, to the provisions relating to the
call set forth in Section 2.2 hereof and, in the case of KPCB and affiliates, to
the terms of the LLC Interest Purchase Agreement and related Warrant.
Section 2.2. Corporation Call Right. (a) For purposes of this Section
2.2, capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Article XVII of the LLC Agreement. Except as
amended by this Section 2.2, the provisions of Article XVII of the LLC Agreement
shall remain in full force and effect.
(b) Immediately prior to completion of the Initial Public
Offering, the Corporation shall make an irrevocable Target Call Offer to
purchase all of Time's Stock at the Target Value. Time shall have 120 days from
receipt of the Target Call Notice to accept or reject the Target Call Offer. In
the event that Time accepts the Target Call Offer, the Corporation shall pay (or
cause to be paid) to Time the Target Value on or prior to the fifth day
following the Call Acceptance Date. The Target Value shall be determined as of
the date that is the earlier of the date of payment or the date that is the 65th
day following delivery of the Target Call Notice.
(c) In the event that the Call Acceptance Date occurs after
the 60th day following delivery of the Target Call Notice, all references to the
phrase "one year following the consummation of a Call" in Section 17.1(e) of the
LLC Agreement shall be replaced by the phrase "one year from the 65th day
following delivery of a Target Call Notice."
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(d) For purposes of determining the definition of Target Value
in Section 17.1 of the LLC Agreement, there shall not be any reduction for the
one-time pro rata distribution to the members of the Company in the amount of
$1.5 million referred to in the letter agreement dated as of July 26, 1999 or in
respect of interest thereon, but there shall be a reduction for any pro rata
distributions to the members of the Company in excess of such amount, except to
the extent such distributions are made pursuant to Section 9.2 of the LLC
Agreement (relating to tax liability distributions).
(e) In the event that Time timely accepts the Target Call
Offer and the Company does not consummate the call pursuant to this Section and
Article XVII of the LLC Agreement, Time shall be entitled to exercise all its
rights (and shall have the obligations) pursuant to the LLC Agreement, and the
parties hereto shall be subject to the terms of the LLC Agreement as applicable
as though no Target Call Offer had been made, provided, that the sale by ▇▇▇▇▇▇▇
contemplated by Section 2.5 hereof shall be permitted (but shall result in a
reduction of any other transfer rights that ▇▇▇▇▇▇▇ has pursuant to the LLC
Agreement). The parties hereto shall take all such actions as necessary or
appropriate to preserve Time's rights, and the rights of the other parties,
under the LLC Agreement. Notwithstanding the foregoing, the Company and the
Corporation shall continue to be obligated to effect the call at the Target
Value.
Section 2.3. Rights Termination Date. For purposes of the LLC
Agreement, and provided that the Company consummates the Target Call Offer in
the event that Time timely accepts such offer, the Rights Termination Date (as
defined therein) shall be deemed to occur on the date of delivery by the
Corporation to Time of the irrevocable Target Call Notice.
Section 2.4. Treatment of Existing Incentive Plans. (a) ▇▇▇▇▇▇▇ hereby
agrees that, from time to time, ▇▇▇▇▇▇▇ shall deliver to the Corporation a
sufficient number of shares of Class A Stock or Class B Stock to cover the
shares of Class A Stock issuable upon exercise of options granted prior to the
date hereof under the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Living Omnimedia LLC Nonqualified Class A
LLC Unit/Stock Option Plan as described under "Management - MSLO LLC
Nonqualified Class A LLC Unit/Stock Option Plan" in the Registration Statement
of the Corporation on Form S-1.
(b) The Corporation and the Stockholders hereby agree that the
awards granted under the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Living Omnimedia LLC Phantom Performance
Unit Plan shall be treated as described under "Management - MSLO Phantom
Performance Unit Plan" in the Registration Statement of the Corporation on Form
S-1.
Section 2.5. Over-Allotments. The Stockholders hereby acknowledge and
agree that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be entitled to sell shares of Stock in the
over-allotment portion of the Initial Public Offering.
Section 2.6. Time Director. Subject to Section 2.2(e), Time hereby
waives its right pursuant to Section 5.2 of the LLC Agreement to delegate a
director of the Corporation prior to the Rights Termination Date.
Section 2.7. LLC Agreement. From the date of the Merger until
consummation of the Initial Public Offering, except as otherwise provided
herein, the Corporation shall be governed
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in the same manner as provided in the LLC Agreement for the Company. Upon
consummation of the Initial Public Offering, the provisions of the LLC
Agreement, other than Article XVII, shall terminate. Upon consummation of the
Target Call, the provisions of Article XVII, other than under Section 17.1(e)
(as amended by this Agreement), shall terminate. The provisions of Section
17.1(e) shall terminate as described therein and in Section 2.2(c) hereof.
Section 2.8. Rescission of Merger. If for any reason the Initial Public
Offering is not consummated promptly following consummation of the Merger, the
Stockholders agree that the Company and the Corporation shall, as promptly as
practicable, take such actions as necessary or appropriate to rescind the Merger
so that the Merger is of no force and effect, upon which rescission, the LLC
Agreement shall be in full force and effect and this Agreement shall be
terminated.
Section 2.9. Paper Purchasing. Time and the Company hereby agree that
they shall continue the paper purchasing arrangement described in Schedule C to
that certain Services Agreement, dated as of February 3, 1997, as amended, by
and between Time, Inc. and the Company, through December 31, 2000, consistent
with past practice.
ARTICLE III
REGISTRATION RIGHTS
Section 3.1. Demand Registration Rights. (a) At any time following an
Initial Public Offering, Time may request that the Corporation effect a
registration of the shares of Stock owned by Time at such time, provided that no
registration shall be made for fewer than all Time's remaining Stock unless the
expected offering price for such Stock is greater than $10,000,000 (a "Time
Demand"). Upon receipt of a Time Demand, the Corporation shall, within five days
thereof, provide written notice to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and KPCB of such request,
and shall, subject to the limitations set forth in Section 3.1(e), use its best
efforts to effect such a registration as soon as practicable and in any event to
file within 75 days of the receipt of such request a registration statement
under the 1933 Act covering all the shares of Stock proposed to be registered by
Time, as well as any shares requested to be included in such registration by
KPCB, ▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ within 20 days of receipt by each of KPCB, ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ of the notice described in this sentence, to cause such registration
statement to become effective and to maintain the effectiveness of such
registration statement for no less than 180 days, provided that such 180-day
period may be suspended if, in the good faith judgment of the Board such
registration would require premature disclosure of material information relating
to a pending corporate development, in which case upon announcement of such
material information the Corporation shall reinstate the effectiveness thereof
for the remaining number of days; provided that in the event such effectiveness
is not reinstated within 30 days of its suspension, Time shall have the option
of withdrawing its demand. In the event that the Time Demand contemplates a
distribution by means of an underwriting, Time shall so advise the Corporation
as part of the Time Demand, and the right of KPCB, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ to
include in such registration any shares of Stock owned by KPCB, ▇▇▇▇▇▇▇ (or any
of its Affiliates) or ▇▇▇▇▇▇▇, as the case may be, shall be conditioned upon
KPCB's, ▇▇▇▇▇▇▇'▇ or Patrick's participation in the underwriting.
Notwithstanding the foregoing, if the underwriter advises
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Time and the Corporation in writing that marketing factors require a limitation
of the number of shares to be underwritten, then the number of shares owned by
KPCB, ▇▇▇▇▇▇▇ (or any of its Affiliates) and ▇▇▇▇▇▇▇ to be included will be
reduced, on a pro rata basis, in accordance with the underwriter's notice. Upon
receipt of a Time Demand, the Corporation shall advise Time of any non-public
information that the Corporation believes may be required to be disclosed during
the offering period (whether as part of the registration statement or
otherwise). Subject to Section 3.4, the Corporation shall not be obligated to
effect more than two registrations pursuant to a Time Demand.
(b) At any time following an Initial Public Offering, KPCB may
request that the Corporation effect a registration of the shares of Stock owned
by KPCB at such time, provided that no registration shall be made for fewer than
all KPCB's remaining Stock unless the expected offering price for such Stock is
greater than $10,000,000 (a "KPCB Demand"). Until the first anniversary of the
Initial Public Offering, in the event that KPCB exercises a KPCB Demand (which
shall be subject to Section 4.3 of the LLC Interest Purchase Agreement), the
Corporation shall promptly provide written notice of KPCB's Demand to Time, and
Time shall be entitled to exercise a Time Demand during the pendency of the
registration statement process for the KPCB Demand without regard to the
limitation set forth in Section 3.1(e)(A)(ii). Upon receipt of a KPCB Demand,
the Corporation shall, within five days thereof, provide written notice to Time,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ of such request, and shall, subject to the limitations set
forth in Section 3.1(e), use its best efforts to effect such a registration as
soon as practicable and in any event to file within 75 days of the receipt of
such request a registration statement under the 1933 Act covering all the shares
of Stock proposed to be registered by KPCB, as well as any shares requested to
be included in such registration by Time, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ within 20 days of
receipt by each of Time, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ of the notice described in this
sentence, to cause such registration statement to become effective and to
maintain the effectiveness of such registration statement for no less than 180
days, provided that such 180-day period may be suspended if, in the good faith
judgment of the Board such registration would require premature disclosure of
material information relating to a pending corporate development, in which case
upon announcement of such material information the Corporation shall reinstate
the effectiveness thereof for the remaining number of days; provided that in the
event such effectiveness is not reinstated within 30 days of its suspension,
KPCB shall have the option of withdrawing its demand. In the event that the KPCB
Demand contemplates a distribution by means of an underwriting, KPCB shall so
advise the Corporation as part of the KPCB Demand, and the right of Time,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ to include in such registration any shares of Stock owned by
Time, ▇▇▇▇▇▇▇ (or any of its Affiliates) or ▇▇▇▇▇▇▇, as the case may be, shall
be conditioned upon Time's, ▇▇▇▇▇▇▇'▇ or Patrick's participation in the
underwriting. Notwithstanding the foregoing, if the underwriter advises KPCB and
the Corporation in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the number of shares owned by Time,
▇▇▇▇▇▇▇ (or any of its Affiliates) and ▇▇▇▇▇▇▇ to be included will be reduced,
on a pro rata basis, in accordance with the underwriter's notice. Upon receipt
of a KPCB Demand, the Corporation shall advise KPCB of any non-public
information that the Corporation believes may be required to be disclosed during
the offering period (whether as part of the registration statement or
otherwise). Subject to Section 3.4, the Corporation shall not be obligated to
effect more than two registrations pursuant to a KPCB Demand. KPCB's rights
under this Article shall also be subject to the limitations on transfer set
forth in the LLC Interest Purchase Agreement and related Warrant.
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(c) At any time following an Initial Public Offering, ▇▇▇▇▇▇▇
may request that the Corporation effect a registration of shares of Stock owned
by it (or any of its Affiliates) at such time, provided that the expected
offering price for such shares of Stock is not less than $10,000,000, provided,
however, that (i) ▇▇▇▇▇▇▇ shall be permitted to demand a registration for a
number of shares equal to 6.27% or more of the number of shares of Stock that
were outstanding immediately prior to the Initial Public Offering if the
expected offering price of such shares is greater than $5,000,000 (a "▇▇▇▇▇▇▇
Demand") and (ii) ▇▇▇▇▇▇▇ shall not be permitted to make a ▇▇▇▇▇▇▇ Demand within
90 days of the completion of any offering pursuant to a Time Demand. Upon
receipt of a ▇▇▇▇▇▇▇ Demand, the Corporation shall, within five days thereof,
provide written notice to Time, KPCB and ▇▇▇▇▇▇▇ of such request, and shall,
subject to the limitations set forth in Section 3.1(e), use its best efforts to
effect such a registration as soon as practicable and in any event to file
within 75 days of the receipt of such request a registration statement under the
1933 Act covering all the shares of Stock proposed to be registered by ▇▇▇▇▇▇▇,
as well as any shares requested to be included in such registration by Time,
KPCB and/or ▇▇▇▇▇▇▇ within 20 days of receipt by each of Time, KPCB and ▇▇▇▇▇▇▇
of the notice described in this sentence, to cause such registration statement
to become effective and to maintain the effectiveness of such registration
statement for no less than 180 days, provided that such 180-day period may be
suspended if, in the good faith judgment of the Board such registration would
require premature disclosure of material information relating to a pending
corporate development, in which case upon announcement of such material
information, the Corporation shall reinstate the effectiveness thereof for the
remaining number of days, provided that in the event such effectiveness is not
reinstated within 30 days of its suspension, ▇▇▇▇▇▇▇ shall have the option of
withdrawing its demand. In the event that the ▇▇▇▇▇▇▇ Demand contemplates a
distribution by means of an underwriting, ▇▇▇▇▇▇▇ shall so advise the
Corporation as part of the ▇▇▇▇▇▇▇ Demand, and the right of Time, KPCB and
▇▇▇▇▇▇▇ to include in such registration any shares of Stock owned by Time, KPCB
or ▇▇▇▇▇▇▇, as the case may be, shall be conditioned upon Time's, KPCB's or
Patrick's participation in the underwriting. Notwithstanding the foregoing, if
the underwriter advises ▇▇▇▇▇▇▇ and the Corporation in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the number of shares owned by Time, KPCB and ▇▇▇▇▇▇▇ to be included will be
reduced, on a pro rata basis, in accordance with the underwriter's notice. Upon
receipt of a ▇▇▇▇▇▇▇ Demand, the Corporation shall advise ▇▇▇▇▇▇▇ of any
non-public information that the Corporation believes may be required to be
disclosed during the offering period (whether as part of the registration
statement or otherwise). Subject to Section 3.4, the Corporation shall not be
obligated to effect more than four registrations pursuant to a ▇▇▇▇▇▇▇ Demand.
(d) At any time following an Initial Public Offering, ▇▇▇▇▇▇▇
▇▇▇ request that the Corporation effect a registration of shares of Stock owned
by her at such time, provided that no registration shall be made for fewer than
all Patrick's remaining Stock unless the expected offering price for such shares
of Stock is greater than $10,000,000 (a "▇▇▇▇▇▇▇ Demand"). Upon receipt of a
▇▇▇▇▇▇▇ Demand, the Corporation shall, within five days thereof, provide written
notice to Time, KPCB and ▇▇▇▇▇▇▇ of such request, and shall, subject to the
limitations set forth in Section 3.1(e), use its best efforts to effect such a
registration as soon as practicable and in any event to file within 75 days of
the receipt of such request a registration statement under the 1933 Act covering
all the shares of Stock proposed to be registered by ▇▇▇▇▇▇▇, as well as any
shares requested to be included in such registration by Time, KPCB and/or
▇▇▇▇▇▇▇ within 20 days of receipt by each of Time, KPCB and ▇▇▇▇▇▇▇ of the
notice described
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in this sentence, to cause such registration statement to become effective and
to maintain the effectiveness of such registration statement to become effective
and to maintain the effectiveness of such registration statement for no less
than 180 days, provided that such 180-day period may be suspended if, in the
good faith judgment of the Board such registration would require premature
disclosure of material information relating to a pending corporate development,
in which case upon announcement of such material information, the Corporation
shall reinstate the effectiveness thereof for the remaining number of days,
provided that in the event such effectiveness is not reinstated within 30 days
of its suspension, ▇▇▇▇▇▇▇ shall have the option of withdrawing her demand. In
the event that the ▇▇▇▇▇▇▇ Demand contemplates a distribution by means of an
underwriting, ▇▇▇▇▇▇▇ shall so advise the Corporation as part of the ▇▇▇▇▇▇▇
Demand, and the right of Time, KPCB and ▇▇▇▇▇▇▇ to include in such registration
any shares of Stock owned by Time, KPCB or ▇▇▇▇▇▇▇, as the case may be, shall be
conditioned upon Time's, KPCB's or ▇▇▇▇▇▇▇'▇ participation in the underwriting.
Notwithstanding the foregoing, if the underwriter advises ▇▇▇▇▇▇▇ and the
Corporation in writing that marketing factors require a limitation of the number
of shares to be underwritten, then the number of shares owned by Time, KPCB and
▇▇▇▇▇▇▇ to be included will be reduced, on a pro rata basis, in accordance with
the underwriter's notice. Upon receipt of a ▇▇▇▇▇▇▇ Demand, the Corporation
shall advise ▇▇▇▇▇▇▇ of any non-public information that the Corporation believes
may be required to be disclosed during the offering period (whether as part of
the registration statement or otherwise). Subject to Section 3.4, the
Corporation shall not be obligated to effect more than two registrations
pursuant to a ▇▇▇▇▇▇▇ Demand.
(e) The Corporation shall not be obligated to effect the
filing of a registration statement pursuant to Section 3.1(a), (b), (c) or (d)
hereof (A) (i) within 180 days following the effective date of a registration
statement pertaining to the underwritten initial public offering of securities
for the account of the Corporation; provided, however, that upon the written
request of Time (which request shall be made no later than 151 days following
completion of the Initial Public Offering), the Corporation shall file a
registration statement pursuant to Section 3.1(a) on the 181st day, or if such
day is not a business day, the next business day thereafter, following
completion of the Initial Public Offering, and (ii) during the 90 days following
the effective date of any registration statement for any underwritten public
offering or an offering with respect to which Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ has
piggyback rights; (B) if the Corporation has furnished to Time, KPCB, ▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇, as the case may be, within 30 days after receipt of a Time Demand, a
KPCB Demand, a ▇▇▇▇▇▇▇ Demand or a ▇▇▇▇▇▇▇ Demand an opinion of counsel to the
Corporation (which counsel and opinion are reasonably satisfactory to Time in
the case of a Time Demand) to the effect that Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as
the case may be, may effect the sale and distribution of its shares of Stock
included in its request and in accordance with such party's intended method of
distribution without the registration of such securities under the 1933 Act; or
(C) if the Corporation has furnished to Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as the
case may be, within 30 days after receipt of a Time Demand, a KPCB Demand, a
▇▇▇▇▇▇▇ Demand or a ▇▇▇▇▇▇▇ Demand a certificate signed by an executive officer
of the Corporation stating that, in the good faith judgment of the Board such
registration would require premature disclosure of material information relating
to a pending corporate development or a special audit of the Corporation, in
which event the Corporation shall have the right to defer the obligations
contained in this Section 3.1 for a period of not more than 165 days (including
the 75-day-period for filing the applicable registration statement) after
receipt of the Time Demand, the KPCB Demand, the ▇▇▇▇▇▇▇ Demand or the ▇▇▇-
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▇▇▇▇ Demand, and provided that the Corporation has not, in any twelve-month
period, utilized the right in this clause (C) more than once.
Section 3.2. Form S-3 Registration. If Form S-3, or any successor form
thereto, is available for such offering, Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇
request in writing that the Corporation effect a registration on Form S-3 and
any related qualification or compliance, and the Corporation shall use its best
efforts to effect, as soon as practicable, such registration, qualification or
compliance as may be so requested and as would permit or facilitate the sale and
distribution of all securities specified in such request and to maintain the
registration on Form S-3 for 180 days following the effectiveness thereof,
provided that such 180-day period may be suspended if, in the good faith
judgment of the Board of Directors, a corporate event requires such suspension,
in which case upon announcement or consummation of such event, the Corporation
shall use its best efforts to reinstate the effectiveness thereof for the
remaining number of days. The Corporation shall notify Time, KPCB, ▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇, as the case may be, of any such request made by the one of the other,
and Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as the case may be, shall have a right to
participate in such registration by providing written notice to the Corporation
within 20 days after receipt of notice of the Corporation of the shares of Stock
to be included. The Corporation shall not be obligated to effect more than two
registrations on Form S-3 for each of Time, KPCB and ▇▇▇▇▇▇▇ and no more than
four for ▇▇▇▇▇▇▇, in each case, pursuant to this Section 3.2. In no event shall
the Corporation be obligated to effect more than two registrations on Form S-3
in the aggregate during any twelve-month period. The anticipated net offering
price of the shares of Stock specified in the request for registration pursuant
to this paragraph shall be at least $10,000,000. The foregoing notwithstanding,
the Corporation shall not be obligated to effect any registration on Form S-3 in
the circumstances, and subject to the limitations, specified in Section 3.1(e)
hereof.
Section 3.3. Corporation Registration. (a) If the Corporation proposes
to register (including for this purpose a registration effected by the
Corporation for stockholders other than Time, KPCB, ▇▇▇▇▇▇▇ (or any of its
Affiliates) or ▇▇▇▇▇▇▇) any of its capital stock or other equity securities
(including any securities convertible into or exchangeable for equity
securities) under the 1933 Act in connection with the public offering of such
securities solely for cash (other than a registration on Form S-8 or any
successor form relating solely to the sale of securities to participants in a
Corporation stock plan, or a registration on Form S-4 or any successor form),
the Corporation shall, at such time, promptly give Time, KPCB, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ written notice of such registration. Upon the written request of Time,
KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ given within 20 days after the receipt of such notice
by the Corporation, the Corporation shall, subject to the provisions of Section
3.3(b), use its best efforts to cause a registration statement covering all of
the shares of Stock that each of Time, KPCB, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ has requested
to be registered to become effective under the 1933 Act. The Corporation shall
have no obligation under this Section 3.3 to make any offering of its securities
or to complete any offering of its securities that it proposes to make, and
shall incur no liability to Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ for its failure to do
so.
(b) In connection with any offering involving an underwriting
of securities being issued by the Corporation, the Corporation shall not be
required under this Section 3.3 to include any of the securities of the
Corporation owned by Time, KPCB, ▇▇▇▇▇▇▇ (or any of its Affiliates) or ▇▇▇▇▇▇▇
in such underwriting unless they accept the terms of the underwriting
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as agreed upon between the Corporation and the underwriters selected by it, and
then only in such quantity, if any, as will not, in the reasonable opinion of
the underwriters, jeopardize the success of the offering by the Corporation. If
the managing underwriter for the offering shall advise the Corporation in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Corporation shall so advise Time, KPCB, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇, and the number of shares that may be included in the underwriting shall
be allocated in priority as follows: (i) all shares of Stock proposed to be
underwritten on behalf of the Corporation, and then (ii) all shares of Stock
requested to be registered by Time, KPCB, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, ratably in
proportion to the number of shares which each of Time, KPCB, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
requested to be registered.
(c) Notwithstanding any other provision of this Agreement, the
Corporation may grant customary "piggyback" rights in connection with any
registration by the Corporation pursuant to this Section 3.3 to other
Stockholders, provided that no such rights shall limit or otherwise reduce the
registration rights of ▇▇▇▇▇▇▇, Time, KPCB or ▇▇▇▇▇▇▇ provided herein. Except as
may be permitted by ▇▇▇▇▇▇▇, Time, KPCB or ▇▇▇▇▇▇▇ (to the extent such person or
entity is a selling stockholder in the registration at issue), other
stockholders shall not have "piggyback" rights pursuant to the registration
rights set forth in Sections 3.1 and 3.2.
Section 3.4. Expenses of Registration. (a) The Corporation shall bear
and pay all expenses other than underwriting discounts and commissions relating
to shares of Stock incurred in connection with each registration, filing or
qualification pursuant to this Article III, including (without limitation) all
registration, blue sky, securities exchange or listing fees (including Nasdaq,
NASD and similar fees), filing and qualification fees, printing and accounting
fees (including for audits and comfort letters), fees and disbursements of
counsel for the Corporation, and the reasonable fees and disbursements of one
counsel for the selling stockholders and (b) shall sign customary underwriting
documents that include customary indemnifications from the Corporation and shall
cause ▇▇▇▇▇▇▇ (at the expense of the Corporation) to participate in customary
roadshows, as may be reasonably requested by the underwriters; provided,
however, that the Corporation shall not be required to pay for any expenses of
any registration proceeding begun at the request of Time, KPCB, ▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇ if the registration request is subsequently withdrawn at any time at the
request of Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as the case may be, in which case
Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ shall bear such expenses (including all
out-of-pocket expenses and fees incurred by the Corporation and the other
selling stockholders), unless Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as the case may
be, agrees to forfeit one demand registration pursuant to Section 3.1 or one
Form S-3 registration pursuant to Section 3.2, whichever is applicable. If Time,
KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ withdraws a registration request after the filing of
the applicable registration statement, Time, KPCB, ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇, as the
case may be, shall reimburse all such expenses and fees and shall also forfeit
such applicable registration right, provided, however, that if such withdrawal
is due primarily to (i) the Corporation's failure to comply in all material
respects with its obligations under Sections 3.1 through 3.5, (ii) the
occurrence of a blackout period under Section 3.1 with respect to sales of Stock
by Time that occurs and is continuing for thirty days or more or (iii) the
failure of the Corporation at a reasonable time, in light of the circumstances,
prior to the filing of such registration statement to advise Time, KPCB, ▇▇▇▇▇▇▇
or ▇▇▇▇▇▇▇, as the case may be, of its knowledge of the existence of an event
relating to the Corporation that would reasonably be expected to have a material
effect on the business, financial condition or market valuation of
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the Corporation, such demand right shall not be forfeited. Underwriting
discounts and commissions relating to the shares of Stock included in a
registration pursuant this Article III shall be borne and paid ratably by the
stockholders in proportion to their participation in such registration and, if
it participates, by the Corporation.
Section 3.5. Furnishing of Information. It shall be a condition
precedent to the obligations of the Corporation to take any action pursuant to
this Article III that a selling stockholder shall have furnished to the
Corporation such information as the Corporation shall request regarding such
selling stockholder, the shares of Stock held by such selling stockholder, and
the intended method of disposition of such securities as shall be required to
effect the requested registration, and that such selling stockholder shall have
provided the Corporation with such representations and warranties, covenants and
opinions as are customary for a selling stockholder in connection with the
registration of a selling stockholder's securities. The Corporation shall
promptly provide any selling stockholders with copies of all correspondence with
the Securities and Exchange Commission related to such registration statement.
Section 3.6. Indemnification. In the event that any Stock of a
stockholder is included in a registration statement under this Article III, such
stockholder and the Corporation shall agree to customary indemnification
provisions (which may include indemnification of any underwriter of such
registration) in connection therewith relating to compliance with the 1933 Act,
the 1934 Act, any state securities law or any rule or regulation promulgated
under the 1933 Act, the 1934 Act or any state securities law in connection with
any matter relating to such registration statement.
Section 3.7. Lock-up Agreements. If reasonably requested by the
managing underwriter, the Stockholders shall enter into customary lock-up
agreements pursuant to which they agree, for a period of 180 days following the
effective date of a registration for the Initial Public Offering, not to offer,
sell or otherwise dispose of any shares of Stock except the shares sold pursuant
to such registration statement without the prior consent of the Corporation and
the managing underwriter.
Section 3.8. Additional Registration Rights. In the event that the
Corporation shall grant to ▇▇▇▇▇▇▇ registration rights not contained in this
Agreement and ▇▇▇▇▇▇▇ shall request such registration, the Corporation shall
provide written notice to each of Time, KPCB and ▇▇▇▇▇▇▇ and each of Time, KPCB
and ▇▇▇▇▇▇▇, at its request, shall be entitled to participate pro rata in such
registration, based on the proportion of shares of Stock held at such time by
each of Time, KPCB, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇.
ARTICLE IV
ARBITRATION
Section 4.1. Dispute Resolution. To the fullest extent permitted by the
Delaware Act and other applicable law, any controversy or claim arising out of
or relating to this Agreement, or any breach thereof, shall be settled by
arbitration in accordance and to the extent permitted by the Uniform Arbitration
Act (10 Del. C. Sec. 5701, et seq.) and, to the extent not inconsistent
therewith, the then-prevailing Rules for Non-Administered Arbitration of
Business Disputes of the CPR Center for Dispute Resolution. Each party to the
arbitration shall select one (1) arbi-
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trator. The arbitrators' ruling shall be binding and conclusive upon the parties
hereto to the fullest extent permitted by law. Any arbitration shall occur in
Wilmington, Delaware, and judgment upon the award rendered may be entered in any
court having jurisdiction thereof. The arbitrators shall be governed by and
shall apply the substantive law of the State of Delaware in making their award.
The expenses of the arbitration shall be borne equally by the parties to the
arbitration, provided that each party shall pay for and bear the cost of its own
experts, evidence and legal counsel.
ARTICLE V
MISCELLANEOUS
Section 5.1. Effectiveness. This Agreement shall become effective (the
"Effective Date") simultaneously with the effective time of the Merger and shall
terminate without liability or penalty on the part of any party or its
directors, officers, fiduciaries, employees, members, stockholders or general
and limited partners (and the directors, officers, fiduciaries, employees,
members, stockholders or general and limited partners thereof) to any other
party or such other party's Affiliates upon termination of the Merger Agreement
pursuant to the terms thereof. Unless theretofore terminated pursuant to the
preceding sentence, the rights of the Stockholders under this Agreement shall
terminate upon the closing.
Section 5.2. Notices. All notices provided for in this Agreement shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, or mailed by registered or certified mail, as follows:
(a) if given to the Company or the Corporation, at
the following address:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Living Omnimedia, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(b) if given to a Stockholder, at the address on file with the Company,
or at such other address as such Stockholder may hereafter designate by written
notice to the Company.
All such notices shall be deemed to have been given when received.
Section 5.3. Amendments. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against any Stockholder unless such modification, amendment or waiver
is approved in writing by each party
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hereto; provided that with respect to any provision containing an agreement
between the Corporation and a Stockholder, such provision may be modified or
waived by approval in writing by the Company and such Stockholder without the
consent of the other Stockholders unless such modification or waiver adversely
affects the rights of such other Stockholder or Stockholders as provided under
this Agreement. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
Section 5.4. Failure to Pursue Remedies. The failure of any party to
seek redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
Section 5.5. Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement. Any remedy under this Section 5.5 is subject to certain equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought.
Section 5.6. Cumulative Remedies. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
Section 5.7. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of all of the parties and, to the extent permitted by this
Agreement, their successors, legal representatives and assigns. If any
Stockholder or any Affiliate thereof shall acquire any shares of Stock, in any
manner, whether by operation of law or otherwise, such shares of Stock shall be
held subject to all of the terms of this Agreement.
Section 5.8. Interpretation. Throughout this Agreement, nouns, pronouns
and verbs shall be construed as masculine, feminine, neuter, singular or plural,
whichever shall be applicable. All references herein to "Articles," "Sections"
and "Paragraphs" shall refer to corresponding provisions of this Agreement.
Section 5.9. Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
Section 5.10. Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had signed
the same document. All counterparts shall be construed together and shall
constitute one instrument.
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Section 5.11. Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and,
except as otherwise provided herein, supersedes all prior agreements and
understandings pertaining thereto.
Section 5.12. Governing Law. This Agreement and the rights of the
parties hereunder shall be interpreted in accordance with the laws of the State
of Delaware, and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
Section 5.13. Confidentiality. Each Stockholder expressly acknowledges
that prior to the Merger such Stockholder has received confidential and
proprietary information relating to the Company, including, without limitation,
information relating to the Company's financial condition and business plans,
and that the disclosure of such confidential information to a third party would
cause irreparable injury to the Company. Except with the prior written consent
of the Company or as required by law (subject to the notice requirement in the
preceding sentence), no Stockholder shall disclose any such information to a
third party, and each Stockholder shall use reasonable efforts to preserve the
confidentiality of such information.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above stated.
STOCKHOLDERS:
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP
By:
----------------------------------------
Name:
Title:
TIME PUBLISHING VENTURES, INC.
By:
----------------------------------------
Name:
Title:
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
KPCB HOLDINGS, INC., as nominee,
an affiliate of KPCB IX Associates, LLC
By:
----------------------------------------
Name:
Title:
GRUBMAN INDURSKY & ▇▇▇▇▇▇▇▇▇, P.C.
By:
----------------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIVING OMNIMEDIA LLC
By:
----------------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIVING OMNIMEDIA, INC.
By:
----------------------------------------
Name:
Title:
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